• Journal of the Korea Academia-Industrial cooperation Society
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• v.22 no.2
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• pp.290-295
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• 2021

This paper analyzed the relationship between corporate debt financing and interest costs using micro firm-level data. We also analyzed the differences in this relationship by the year of 2008 financial crisis. We did not find a negative relationship between corporate interest costs and debt financing. Prior to the 2008 financial crisis, we found a negative relationship between corporate interest costs and debt financing. However, following the 2008 financial crisis, we found a positive relationship between corporate interest costs and debt financing. The impacts of the decrease in corporate interest costs on the increase in corporate debt financing are not significant in the Korean economy. After the 2008 financial crisis, the decrease in corporate interest costs is followed by a decrease in corporate debt financing.

• Asia-Pacific Journal of Business
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• v.12 no.4
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• pp.253-270
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• 2021

Purpose - The main purpose of this study is to measure and evaluate the level of national liabilities that Korea's national finances can afford. Specifically, the concepts of national debt and national liability are clarified, and the appropriate level of national liabilities is measured in terms of short-term fiscal crisis, mid-to-long-term fiscal crisis, and GDP. Based on these measurements of fiscal crisis, this study would like to propose national fiscal management plans. Design/methodology/approach - In order to clearly recognize the difference between the national debt and the national liability, this study examines the data from 2013 to 2020. In addition, this study uses data from the national financial statements from 2013 to 2018 to measure the appropriate level of national liabilities in terms of fiscal crisis management. Findings - Short-term fiscal crises, measured by current ratios, will not occur. Nevertheless, in view of the cash flow compensation ratio, the short-term bankruptcy of the national finances of Korea depends on the re-borrowing of short-term borrowings and current and long-term borrowings. In addition, in order to manage the mid-to long-term financial crisis, it is necessary to pay attention to the liability growth rate rather than the liability size. Research implications or Originality - While previous studies focused on the appropriate level of national debt, this study was differentiated as a study focused on the level of national liability coverage. It is expected that the results of this study will be used to manage the national fiscal soundness.

• International Journal of Contents
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• v.5 no.1
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• pp.37-45
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• 2009

This paper empirically tests pecking order theory. Korean listed firms are used as the samples. On the whole we find supportive results for pecking order theory. The fixed effect model on the whole period shows that as pecking order theory suggests that debt ratio decreases as cash flow. ROA, physical assets, and firm size increase. Again, it is shown that corporate debt ratio significantly decreases as cash flow or ROA increases in every sub-sample, which coincides with the prediction of pecking order theory. Corporate debt ratio significantly decreases as physical assets or jinn size increases in case of the whole sample, pre-financial crisis period, and the sub-samples by q-ratio, which also supports the prediction of pecking order theory. Statistical significance of the coefficients of physical assets or firm size completely disappears after Korean financial crisis. Perhaps it is because the role of physical assets or firm size as a mitigator of information asymmetry significantly weakens after the financial crisis as Korean financial market becomes more transparent. For small firms only size variable is negatively and significantly related with debt to assets. It seems that size is an important factor for smaller firms in making financing decision.

• The Journal of Industrial Distribution & Business
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• v.9 no.1
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• pp.25-38
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• 2018

Purpose - The purpose of this study is to empirically investigate the impact of donor's fiscal status on aid decisions before and after the 2008 global financial crisis. The effects on aid can change depending on the donor country's fiscal status and the period of financial crisis. Research design, data, and methodology - A fixed effect regression and dynamic panel GMM is conducted using a comprehensive dataset combining 31 donor and 167 recipient countries during 1996-2015. The key explanatory variable is central government debt-to-GDP ratio of donor country. Recipient countries' GNI per capita, population, governance indicators, and bilateral trade-to-GDP ratio between donor and recipient countries are included as control variables. Results - We can confirm the relationship between donor country's fiscal status and aid flow. The cyclical component of government debt is found to have a negative impact on grant decisions particularly after the 2008 global financial crisis. This effect becomes larger in the countries with high government debt-to-GDP ratio. ODA decisions from the countries with low financial constraint do not significantly affected by the recipient countries' factors such as GNI, population, and governance indicator. Conclusions - Based on the empirical results of this study, the source of aid should be diversified by incorporating private sector and innovative financing sources.

• Journal of the Korean Regional Science Association
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• v.15 no.1
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• pp.75-92
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• 1999

In this study, the present state of fiscal crisis for local governments after IMF is analyzed, firstly. its implications Characteristics of structural reform of finance after IMF bailout in Korea are examined, secondly. Since Korea was shocked by the currency crisis at the end of 1997, its local governments have also faced fiscal difficulties. The Depression of national and local economies led to decreases in tax revenues of local governments. And these shrunken revenues led to their expenditure cuts. Many investment plans were curtailed, and ordinary expenditures were also reduced sharply. The negative influences of the currency crisis on local government's finances can be examined in terms of fiscal revenue, fiscal spending, and debt burden. As a result many local governments are now experiencing fiscal stress, and some of them are even faced with fiscal crisis although the possibility of extreme measures, such as moratoriums or bankruptcies, is very slim. This is due in part to the weight of debt in local governments' budgets having remained small since the debt of local governments has been controlled by the central government. Another reason is that, central government, which functions as a lender of last resort for the local governments, will pay the debt for them. Also, without a legal system which stipulates the adjudication of bankruptcy for municipalities in Korea, local Korean governments have no legal right to declare bankruptcy. Although not a single municipality has fallen into insolvency, yet, this trend will continue to deepen as the recession continues and may lead to a situation where manu local governments fall into virtual bankruptcy in the near future, and its effects on society, as a whole, will be serious. Therefore, measures to prevent and overcome such an extreme situation are necessary, but both short-and long-term policies should be to cope with the current fiscal crisis and to prevent the deepening of the current situation.

• The Journal of Fisheries Business Administration
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• v.42 no.2
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• pp.1-14
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• 2011

We try to find the determinants of fisheries firms' capital structure during the years from 1992 to 2007 in this paper. We also have a comparative analysis of capital raising behavior in pre and post-IMF financial crisis. Regression analysis is used for this empirical study. Dependent variable is leverage ratio and independent variables are firm size, operating risk, proportion of tangible asset, non-debt tax shield effect, sales growth ratio, profitability and dummy variable. We compared the characteristics of fisheries industry with that of manufacturing industy. The determinants of fisheries firms' capital structure and correlation between pre and post-IMF financial crisis are roughly same as the hypothses except a little difference. As a peculiar difference, corrlation between fisheries firms' operating risk and leverage ratio is (+) in the pre-IMF financial crisis, but (-) in the post-IMF financial crisis. Proportion of tangible asset has a (+) correlation with leverage ratio in pre and post-IMF financial crisis, but in case of manufacturing industy, (-) correlation shows in the pre-IMF financial crisis. Because, in the pre-IMF financial crisis, high proportion of tangible asset doesn't play a role of a collateral, but only increase the bankruptcy probability. Non-debt tax shield effect and leverage ratio have (-) correlation in all industry and all period, but only (+) correlation in case of fisheries industry in the pre-IMF financial crisis. Sales growth ratio has no significant relationship with leverage ratio in fisheries industry, and this is not coincide with our hypothsis. We have a limitation of the sample size of fisheries firms and sample period in this study. Further study is required to classify the fisheries industry with in-shore fisheries, deep sea fisheries and cold storage industry.

• Journal of the Economic Geographical Society of Korea
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• v.19 no.3
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• pp.512-534
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• 2016

This paper is to see what appears to be an economic crisis as urban crisis, to explore its emerging process and its major distinctive figures in the context of S. Korea, and to consider alternatives to overcome such an urban crisis. For this purpose, it first tries to show that the capitalist economic development (i.e. capital accumulation) has been stimulated and driven largely by extending investments into built environments. Then it analyzes how crises of overaccumulation, coupled with other crises such as the IMF crisis in 1997 and the financial crisis in 2008 which have been brought about by serious impacts of foreign financial capitals working on the global level, have led to accumulating of huge surplus reserves within both big companies and the central government on the one hand, increasing tremendously debts of households as well as government and private companies on the other. In particular, the debt crisis seems to be accelerated by fictitious capital generated through government's financial strategies to promote both supplies and demands in housing and property markets. There seem several ways of overcoming the urban crisis spiraled around accumulating surplus capital and increasing financial debt; raising real income, moderating investments into built environment, and increasing inputs into the fields of technology and well-being. In order to open up these ways, it is concluded, recent urban movements in terms of the right to the city are required not only to make the government and capital to do so, but also to realize interest of urban people who have produced such surplus but who are suffering from the debt crisis.

• Journal of the Korean Home Economics Association
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• v.38 no.11
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• pp.1-12
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• 2000

The purposes of the study were to investigate the effects of the debt burden which was measured objectively, the types of debts and socio-economic characteristics on the subjective debt burden of households. The questionaires for 457 households who hold some debts were analyzed using t-test, ANOVA and Duncan’s multiple range teat. The major finding are summarized as follows: (1) the objective debt burdens which were measured by three variables, that is monthly debt repayment, the ratio of debt repayment to household income and total debt amount, affected the subjective debt burden. The households in which the monthly debt repayment was over 200 thousand won, the debt repayment was over 20% of the household income and the total debt amount was over 15 minion won felt higher debt burden. (2) the types of debts, which were classified into four groups such as debts from financial institutes, debts from private sources, credit card debts and debt from retailers, influenced differently the subjective debt burden. Holding debts from financial institutes and debts from private sources increased the subjective debt burden whereas holding credit card debts and debt from retailers did not. (3) the level of subjective debt burden were different according to household income, change in income due to IMF crisis, financial assets, home ownership, residence, householder’s age, job and educational levee. Based on the results, criterion for household’s debt management were suggested.

• Journal of the Korea Convergence Society
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• v.10 no.12
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• pp.299-305
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• 2019

This study analyzed the relationship between the debt ratios of Korean and Japanese manufacturing firms with accruals and actual earnings managements after the global financial crisis. This study was conducted on Korean and Japanese firms from 2008 to 2015. As a result, the Korean firms, the higher (lower) debt ratio is, more up(down)side earnings management using discretionary accruals and operating cash flow. In contrast, the Japanese firms found that the higher(lower) the debt ratio is, more up(down)side through its actual activities (operating cash flows, manufacturing costs, discretionary costs) rather than accruals. This study establishes the academic basis for the decision-making of Korean-Japanese firmss by using the sample of each country to check what kind of decision-makers are making earnings managements at the present time when the relationship between Korea and Japan has suffered due to export restrictions. It is meaningful in that it was.

• East Asian Economic Review
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• v.23 no.4
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• pp.353-379
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• 2019

This paper aims to determine factors causing the stagnation of Korean firms' fixed investment after the global financial crisis, using panel data for the period of 1999-2016. Fixed investment remained sensitive to cash flow and Tobin's q although their effects decreased after the global financial crisis. A decreasing trend of cash flow and an increase in Tobin's q since the early 2000's imply that the worsening cash flow was a major factor behind the sluggish investment after the crisis. Meanwhile, debt-equity ratio remained significant for non-chaebol affiliated firms, reflecting disparity in access to external financing. Volatility of stock returns also became insignificant after the crisis, casting doubt on the argument that uncertainty was a major factor contributing to the decline of fixed investment. Analysis of financial investment confirmed the significant effect of cash flow, larger than that on financial investment than on fixed investment. In particular, debt repayment and other financial investment, except share repurchase, were sensitive to cash flow. However, the substitution of fixed investment by financial investment is a consequence, rather than a cause of declining fixed investment.